All I can say to investors today is: "Chill out, people -- this selloff has gotten ridiculous."
Wasn't it true for a really, really, long time that low energy prices were a good thing? Didn't we love it when filling up our cars with gas cost less than half of our monthly paychecks? Why is that now suddenly terrible?
Delta Air Lines (DAL) certainly doesn't think so. The company booked nearly $1 billion in profits during its latest quarter. A billion dollars! I remember when airlines couldn't make any money at all, but now they're making plenty thanks to low fuel costs.
Delta's sterling results will most surely be echoed in the near future by thousands of more companies, or maybe even millions more when you count all of the U.S. small businesses out there. How is that bad?
And as I've previously noted, all of this "low-energy price" stuff is simply a wealth transfer -- money is staying with oil consumers instead of going to oil producers. The money doesn't fly out into outer space, so why is everyone getting so crazy?
And then there's China, where the latest figures show that the economy is growing at a 6.8% annual rate. Can someone please explain to me why that's bad? Because it isn't 7%?
Seriously? That's why commodity prices are collapsing and we're supposedly going into a global recession? Chinese industrial production is up 5.9%, while retail sales grew 11.1% and capital investment rose 10%. Again, we're going into a global recession because of this?
Here in America, we just learned that December housing starts "fell" to just under 1.2 million units. But when the market last crashed back in August, starts were only at 1.1 million units.
In other words, we're building some 100,000 more homes right now, but the stock market is below where it was last summer? How does that make sense? Building permits also surpassed 1.23 million in December vs. 1.16 million last August. So, we need to dump stocks why?
Do you want me to keep going? OK!
The growth of bank lending is at an eight-year high, while total loans and leases are at all-time highs. In other words, the U.S. financial system clearly isn't freezing up, as it was back in 2008-09.
And better yet, even if banking does freeze up, the Federal Reserve knows what to do this time around. Back in 2008-09, it took the Fed six months to decide whether it had the power to lend against all assets, unconditionally and without limit.
It's true that the Fed is in a monetary-policy shift and has nudged the fed funds rate up a bit. But everyone knew that was coming, and besides, rates are still unbelievably low.
Did I forget to mention that unemployment is at an eight-year low? How about weekly unemployment claims? They're not far from a 40-year low. And this is bearish why?
Seriously, people, you gotta chill! This wholesale selling of stocks is getting ridiculous. It's all a case of the "herd mentality." Someone sells, then someone sees that person selling and decides to sell, too.
It all snowballs, and then the media jump in and talk about how the stock market is "crashing" and how you need to protect your 401(k) -- or worse, how much your 401(k) is "losing." Before you know it, we're in a total full-fledged panic over nothing.
The problem is that such a selloff can turn into a real problem for the economy, even when investors are acting irrationally in light of current realities. Consumers get scared and stop consuming, then businesses see their sales drop and decide to lay off workers. You get a vicious cycle leading downward, all created out of nothing.
So my message to investors today is: "Chill out, people! You gotta be cool!"